Coal, Cattle Ranching ‘Most Environmentally Costly’ Businesses

Coal-powered energy and cattle ranching are the two most environmentally expensive industries — and cost the economy more in environmental damage than they generate in revenue, according to a UN-backed report.

Natural Capital at Risk – The Top 100 Externalities of Business by the Economics of Ecosystems and Biodiversity Business Coalition, estimates that the primary production — including agriculture, forestry, fisheries, mining, oil and gas exploration, utilities — and primary processing — including cement, steel, pulp and paper, petrochemicals — sectors analyzed have externality costs totaling $7.3 trillion, which equates to 13 percent of global economic output in 2009.

Coal-fired power in Eastern Asia and in Northern America rank first and third, respectively in terms of environmental impact, estimated at $453 billion per annum in Eastern Asia and $317 billion in North America. Environmental damages cased by the coal-fire power industry consist of greenhouse gas emissions and the health costs and other damage due to air pollution. In both instances, these social costs exceeded the production value of the sector: the Eastern Asia regional industry generates $443 billion a year and the Northern American industry generates $247 billion a year, the report estimates.

Cattle ranching in South America — ranked as the second-most environmentally damaging regional industry — is responsible for around $354 billion of damage to the environment a year but generates just $18 billion, the report says. Damages from this industry consist of water use in water-scarce areas and land use.

The majority of environmental externality costs are from GHG emissions (38 percent), followed by water use (25 percent), land use (24 percent), air pollution (7 percent), land and water pollution (5 percent) and waste (1 percent).

Some companies, however, are increasingly focusing on reducing their environmental costs. Unilever, for example, now sources more than a third of its agricultural raw materials sustainably as it aims for all such goods to come from green sources by 2020. In November, Unilever, PepsiCo, Marks & Spencer and other companies that make up the Cool Farm Institute selected Best Foot Forward and Centre for Agriculture and Environment as software partners to build a free online carbon calculator for farmers and suppliers.

German sportswear firm Puma was the first company to release an environmental profit and loss account. The account valued the greenhouse gas and water consumption impacts of the company’s operations and supply chain at €94.4 million ($133.5 million) in 2010.